EBITDA Multiples Analysis for Telco


All of us should know business challenges of all Telco in the world, so I won’t list them here (2 seconds Googling).
I was very curious about where will our local Telco (#DIGI#MAXIS, etc…) be heading to, from valuation perspective (#EBITDA Multiples – EV/EBITDA)?
Thus, to get the trend, I have spent 11-12 crazy working hours in the past 2 weeks to collect past 5 years historical EV/EBITDA of 107 Telco (> USD 1,000 mil market cap).
In the past five years, in average, EV/EBITDA was in the range from 5.3 to 9.1. Compare to our local telco (latest financial year),
1. MAXIS – 14.02
2. DIGI – 13.3
3. #AXIATA – 7.66
4. #TM – 7.03
There are only 23 companies (of course, including DIGI and MAXIS) having EV/EBITDA more than 10. The obvious trend is EBITDA Multiples of 16 companies (out of 23) are gradually declining.

On one hand, we may argue that MAXIS and DIGI deserve higher valuation because of high dividend payout. On the other hand, both are facing the same challenges like others, and we can see stagnant (perhaps declining) growth in their top-line and bottom-line. High dividend payout must be supported by top-line and bottom-line too.
I believe in long term (I don’t know how far away), EBITDA multiple of DIGI and MAXIS will be converging below 10.
For DIGI, if we use 5.3-9.1 as guidance, its fair value is 2.3-3.5. This is very different from my previous valuation.